Summary of the Medical Indemnity Reform commencing 1 July 2020

WHAT WILL CHANGE 1 JULY 2020

17 medical and midwife indemnity instruments currently underpin the Commonwealth’s insurance.

The reform consolidated and repealed redundant legislation and instruments. From 1 July 2020, there will be 7 medical and midwife instruments that will underpin the Commonwealth’s insurance. These are discussed in the table below.

Premium Support Scheme (PSS) Contracts until 30 June 2020 with four insurers.

The existing contract requirements for the Premium Support Scheme will cease. The necessary requirements will be set out in legislation. To participate in the PSS, medical indemnity insurers will be required to offer the PSS to medical practitioners.

Universal Cover Obligations not mandatory for all insurers.

All medical indemnity insurers will be required to provide universal cover to medical practitioners.

Only medical practitioners have access to High Cost Claims Scheme and Exceptional Claims Scheme.

Allied Health Professionals will have access to the High Cost Claim Scheme and Exceptional Claim Scheme through a separate scheme to that of medical practitioners.

Support high cost claims and exceptional cost claims made against private sector employee midwives not covered under the Midwife Professional Indemnity Scheme.

This cohort of midwives will transition to the Allied Health High Cost Claims Scheme and Allied Health Exceptional Claims Scheme. All private sector employee midwives covered under their employer’s insurance policy, including both registered and endorsed midwives, will have access to the allied health schemes from 1 July 2020.

Medical practitioners and eligible midwives need to be 65 years old and over to access Run-off Cover Scheme (ROCS).

The age 65 requirement for eligibility for the ROCS will be removed. Medical practitioners and eligible midwives retiring before the age of 65 will be able to access the ROCS.

Onerous claims processing for insurers and poor data quality.

Improved online claiming and payment system will be rolled out. This will reduce the administrative burden on insurers and minimise the risk of delays in payments to eligible practitioners.

Market stability and affordability is unknown.

An actuarial assessment will be undertaken to report on the stability and affordability of Australia’s medical indemnity market, with the report to be tabled before each House of Parliament by 28 February 2021.

What each instrument covers

Medical Indemnity Rules 2020

This instrument covers the following matters:

• incurred but not reported (IBNR) indemnity scheme;
• high cost claim indemnity scheme;
• exceptional claims indemnity scheme;
• run-off cover (ROC) indemnity scheme;
• allied health high cost claim indemnity scheme;
• allied health exceptional claims indemnity scheme; and
• universal cover obligation.

Medical Indemnity Regulations 2020

This instrument removes redundant provisions identified through the reform process and brings together the requirements set out in the following three existing instruments:

• Medical Indemnity (IBNR Claims) Protocol 2006
• Medical Indemnity (Run-off Cover Claims and Administration) Protocol 2006 (No. 2); and
• Premium Support Scheme 2004.

Medical Indemnity (Prudential Supervision and Product Standards - Notice of Provision of Run-off Cover) Determination 2020

This instrument sets out the additional information that must be provided to the Chief Executive Medicare pursuant to section 26D of the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 (PSPS Act).

Medical Indemnity (Prudential Supervision and Product Standards) Regulations 2020

This instrument describes the types of insurance to which the PSPS Act does not apply, the circumstances in which an insurer must offer run-off cover and caps the amount of the premium payable for run-off cover (such that it must not exceed the cost to the insurer of providing the cover without returning a profit to anyone for the provision of that cover).

Medical Indemnity (Run-off Cover Support Payment) Regulations 2020

This instrument provides that:

• the amount of the run-off cover support payment is 5% of the insurer’s premium income for contribution years beginning on or after 1 July 2020; and
• for the purpose of working out the insurer’s premium income for a contribution year, the income is to be reduced by any amount of refund payable by a medical indemnity insurer to a medical practitioner in respect of an overpayment of a premium for medical indemnity cover.

Midwife Professional Indemnity (Commonwealth Contribution) Scheme Rules 2020

This instrument establishes the meaning of an eligible insurer and an eligible midwife, and sets the interest rate that is payable if an eligible insurer does not pay back an amount overpaid to the insurer by the Commonwealth.

Midwife Professional Indemnity (Run-off Cover Support Payment) Rules 2020

This instrument specifies that 10% is the applicable percentage for working out the amount of run-off cover support payment for a contribution year beginning on or after 1 July 2020.

Medical Indemnity (UMP Support Payment Exemption) Repeal Regulations 2020

This instrument repeals the redundant Medical Indemnity (UMP support payment exemption) Regulations 2006.